Why one in nine American households forgoes having a checking account

The digital age has given way to several alternatives for traditionally paper-trailed transactions. Payments can be wired and saved electronically, but still be available to withdraw in cash. Documents can be validated by thumbprint scans and e-signatures. Even money itself has been replaced by plastic cards and virtual figures. With a wide array of banking services available to any interested customer, it seems almost impractical not to subscribe to electronic money storing and transacting.

Despite this, a significant number of working Americans do not even own an ATM card.

An article published on TIME late last year points out that nearly 30 percent of the country’s population does not have an account at any bank, and another 22 percent is “underbanked,” meaning they do not utilize or have access to the full range of basic financial services made available by most banks. When examined, it appeared these people did not participate in modern banking for one of two main reasons:

  1. ATMs do not always function – Almost all ATM account holders have experienced being unable to withdraw cash due to an empty machine or a malfunction which freezes any transactions. Most unfortunate are the ones who have experienced the terror of having their card “eaten” by the machine on a weekend or a non-banking holiday. Having direct access to one’s own cash eliminates the need to open a bank account which may one day fail the account holder.
  2. It’s difficult to maintain minimum balance – Many savings and checking account providers require clients to leave a specific amount of money in the account at all times. Depending on the account type, this can range from $100 to $1,000 and sometimes even more. Particularly in this economy, many Americans living from paycheck to paycheck simply do not have the money to leave in these accounts.

Although banks make a range of services available to their clients, it seems not all citizens qualify or will benefit from these services. To increase the use of banks and trust in the banking system, financial institutions may consider rethinking or relaxing some policies.

This Twitter account for LoanMax provides more tips and updates on managing loans and finances.

TAGS: loan, bank, bank account, credit, credit card

SOURCES: http://business.time.com/2012/11/20/why-so-many-americans-dont-have-bank-accounts